Tag Archives: Satya Nadella

Why we need a public cloud for the public good

Today Microsoft Philanthropies, the recently-announced expansion of our commitment to global giving, is making a big statement. We will donate $1 billion in cloud computing resources over the next 3 years to 70,000 non-profits and NGOs worldwide. I invite you to read details of the news in Brad Smith’s blog post published today.

So why is this important, and why now?

In the January 20 issue of The Financial Times I write about the challenges and the opportunities that make this effort necessary. (Note: Subscription required to access link.) In that op-ed piece, I pose a question: How can we make it easier for governments and NGOs to use the public cloud for public good?

The “public cloud” refers to massive, privacy-protected data and storage services rendered over a network for public use. Cloud computing makes it possible to reason over quantities of data to produce specific insights and intelligence. It converts guesswork and speculation into predictive and analytical power.

Last fall, world leaders at the United Nations adopted 17 sustainable development goals to tackle some of the toughest global problems by 2030, including poverty, hunger, health and education. A careful read of those goals reveals the central role that data and cloud computing must play for analysis and action.

This week, I am attending the World Economic Forum in Davos, Switzerland, to join other leaders as we focus on the fourth industrial revolution, a digital transformation brought about by ubiquitous, powerful, mobile and networked technologies.

Among the questions being asked in Davos are these: If cloud computing is one of the most important transformations of our time, how do we ensure that its benefits are universally accessible? What if only wealthy societies have access to the data, intelligence, analytics and insights that come from the power of mobile and cloud computing?

Governments are searching for a coherent, pro-cloud policy framework. I believe there are four elements – infrastructure, next generation skills development, trusted computing and leadership. This framework would encourage more pervasive use of the public cloud for public good. Here is what I mean.

In India, the LV Prasad Eye Institute has treated 20 million patients with cataracts, a leading cause of preventable blindness. Through digitization of medical records and other socio-economic data, doctors now can pinpoint the procedures needed to prevent and treat visual impairments.

In Nepal, after the devastating earthquake there last April, disaster relief workers from the United Nations used the public cloud to collect and analyze massive amounts of data about schools, hospitals and homes to speed up access to compensatory entitlements, relief packages and other assistance.

I cite several other examples in my Financial Times commentary, but these should not be isolated stories.

Philanthropy is a start, but to truly harness the public cloud for public good, businesses, governments and NGOs must come together with a shared vision and relentless passion to improve the human condition and drive new growth equally.

How we’re putting the Microsoft Cloud to work for the public good

As Satya Nadella announced today, we’re committed to putting the Microsoft Cloud to work for the public good. That’s why Microsoft Philanthropies, with support from Microsoft Research and Microsoft Business Development, will donate $1 billion in Microsoft cloud services to nonprofits and university researchers over the next three years. Our goal is to support 70,000 nonprofits through this initiative during that time. I wanted to provide some more detail on what we’re doing and the commitments we are making today.

Our rationale for today’s announcement is simple. Cloud computing has emerged as a vital resource for addressing the world’s problems. Cloud services can unlock the secrets held by data in ways that create new insights and lead to breakthroughs, not just for science and technology, but for addressing the full range of economic and social challenges and the delivery of better human services. They can also improve communications and problem-solving and can help organizations work in a more productive and efficient manner.

As Satya makes clear, both the need and the opportunity are real. It is vital that the cloud serve the public good in the broadest sense. While the marketplace is reaching a rapidly growing number of customers around the world, it is not yet benefitting everyone. If we’re going to realize Microsoft’s mission of empowering every person and organization on the planet to achieve more, we need to reach those that the market is not yet reaching. We need to reinvent our corporate philanthropy for the next decade, ensuring that we help empower people and organizations the cloud is not yet serving. This will require extensive efforts on a global basis that reflect varied needs around the world, oftentimes in ways that bring companies, NGOs and governments together in new public-private partnerships.

We believe that each of us in the tech sector has a role to play, and we should each do our part. As we at Microsoft seek to play our part, we’re launching today three concrete initiatives that are designed to ensure that cloud services are easily accessible to nonprofit organizations, faculty researchers in universities and people who today lack affordable broadband access.

Here’s what we are doing:

1. Serving the broad needs of the nonprofit community.

Through our new Microsoft Philanthropies arm of the company, founded last month and headed by Mary Snapp, we will build on our longstanding global software donation programs to create a comprehensive and industry-leading donations program to provide cloud services to nonprofit organizations worldwide. This will ensure that nonprofits have access to the full suite of Microsoft’s cloud services. Specifically, we’ll include:

  • Microsoft Azure, so NGOs can access our data centers around the world to develop and run their applications and make use of our computing and storage power;
  • Enterprise Mobility Suite (EMS), so nonprofits can manage all of their devices, applications, and data on a cross-platform basis based on industry-leading security and identity management services;
  • CRM Online, so nonprofits can use our new cloud solution for managing relationships with donors and beneficiaries;
  • The expansion of our Office 365 Nonprofit program, which currently includes the cloud-based versions of Outlook, Word, Excel, PowerPoint, and will now include Microsoft’s Power BI, so nonprofit groups can make use of our newest business intelligence and data analytics.

The full Microsoft Cloud nonprofit program will begin rolling out this spring. We’ve been providing Office 365 services to nonprofits the past two years, and we will apply to this new and broader effort everything we have learned from this experience. We are setting today the goal of serving 70,000 NGOs through one or more of these offerings by the end of 2017, and then we’ll focus on serving even more nonprofit groups each year. We expect that in 2016 alone we’ll donate to nonprofits through these offerings cloud services with a fair market value of close to $350 million.

2. Expanding access to cloud resources for faculty research in universities.

Through Microsoft Research and Microsoft Philanthropies, we will significantly expand our Microsoft Azure for Research program, which grants free Azure storage and computing resources to help faculty accelerate their research. Harry Shum, our executive vice president for Technology and Research, has been a passionate advocate for the potential of cloud computing to be transformational when in the hands of passionate research teams committed to understanding and addressing big challenges. To date this program has provided free cloud computing resources for over 600 research projects on six continents. We will build on what works and will expand our donations program by 50 percent, with a focus on reaching important new research initiatives around the world.

We know from experience that this program can make a critical difference for researchers in universities, and our increased funding for this effort therefore builds on a successful formula. As a company we have supported and witnessed compelling examples of the breakthroughs that can be achieved when university faculty harness the unprecedented power of the cloud is used to analyze data, unlock insights and predict outcomes. From protecting forests in Brazil to fighting wildfires in Greece, and from developing new medicines in the United Kingdom to modeling flood risks in Texas, dedicated university researchers have used Microsoft Azure to advance their cutting-edge research projects. The expansion of funding for these grants will enable faculty around the world to accomplish even more.

3. Reaching new communities with last-mile connectivity and cloud services.

Finally, we will pursue new initiatives that bring together Microsoft Business Development and Microsoft Philanthropies to combine investments in innovative new technologies for last-mile connectivity access with donated access to our cloud services. Just last month, Peggy Johnson, our Executive Vice President for Business Development, announced in the Philippines part of our new focus on funding new connectivity access for underserved communities, building on such work as our TV White Spaces project to bring low cost connectivity to rural Kenya through the Mawingu project.

We’re enthusiastic about the potential for TV White Spaces to bring broadband connectivity at a low cost to more communities around the world – and to do so in 2016, without waiting for the arrival of the next decade. That’s why we’re going to grow this connectivity initiative by growing our financial investment and combining it with cloud services donations and community training programs that we’ll pursue in partnerships with local governments and nonprofit groups. By combining connectivity with cloud services and training focusing on new public-private partnerships, we are setting a goal of pursuing and supporting at least 20 of these projects in at least 15 countries around the world by the end of 2017.

Taken together we believe these steps will ensure that nonprofit organizations and university researchers around the world obtain the access they need to pursue cutting-edge solutions to the world’s most pressing problems.

Our approach reflects the unmet need we see in communities around the world, the confidence we have in the ability of nonprofits and researchers to solve these challenges, and the ambition we have for Microsoft Philanthropies to drive digital inclusion and empowerment programs around the world.

All this also reflects a cross-company commitment to help respond to the question Satya raised: How can we make sure the cloud truly serves the public good? Today is a step on that journey. We are committed to doing more, and in the coming months we will launch additional programs through Microsoft Philanthropies to address this opportunity. We’re committed to being part of a broad discussion and a comprehensive response, built on partnerships across civil society and around the world.

Strong execution drives Microsoft first quarter results

Windows 10 running on 110 million devices; commercial cloud annualized revenue run rate exceeds $8.2 billion

REDMOND, Wash. — October 22, 2015 — Microsoft Corp. today announced the following results for the quarter ended September 30, 2015:

  • Revenue was $20.4 billion GAAP, and $21.7 billion non-GAAP
  • Operating income was $5.8 billion GAAP, and $7.1 billion non-GAAP
  • Net income was $4.6 billion GAAP, and $5.4 billion non-GAAP
  • Earnings per share was $0.57 GAAP, and $0.67 non-GAAP

Non-GAAP financial results exclude the deferral and recognition of revenue primarily related to Windows 10.

During the quarter, Microsoft announced a 16% increase in its quarterly dividend to $0.36 and returned $6.9 billion to shareholders in the form of share repurchases and dividends.

“We are making strong progress across each of our three ambitions by delivering innovation people love,” said Satya Nadella, chief executive officer at Microsoft. “Customer excitement for new devices, Windows 10, Office 365 and Azure is increasing as we bring together the best Microsoft experiences to empower people to achieve more.”

The following table reconciles these financial results reported in accordance with generally accepted accounting principles (“GAAP”) to non-GAAP financial results. Microsoft has provided this non-GAAP financial information to aid investors in better understanding the company’s performance. All growth comparisons relate to the corresponding period in the last fiscal year.

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“We’re pleased with our operating results this quarter. With financial discipline and strong execution, we grew operating income by 11 percent in non-GAAP constant currency,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Revenue in Productivity and Business Processes declined 3% (up 4% in constant currency) to $6.3 billion, with the following business highlights:

  • Office commercial products and cloud services revenue grew 5% in constant currency with Office 365 revenue growth of nearly 70% in constant currency and continued user growth across our productivity offerings
  • Office 365 consumer subscribers increased to 18.2 million, with approximately 3 million subscribers added in the quarter
  • Dynamics revenue grew 12% in constant currency, with the Dynamics CRM Online enterprise installed base growing more than 3x year-over-year

Revenue in Intelligent Cloud grew 8% (up 14% in constant currency) to $5.9 billion, with the following business highlights:

  • Server products and cloud services revenue grew 13% in constant currency, with revenue from premium products and services growing double-digits
  • Azure revenue and compute usage more than doubled year-over-year
  • Enterprise Mobility customers more than doubled year-over-year to over 20,000, and the installed base grew nearly 6x year-over-year

Revenue in More Personal Computing declined 17% (down 13% in constant currency) to $9.4 billion, with the following business highlights:

  • Windows OEM revenue declined 6%, performing better than the overall PC market, as the Windows 10 launch spurred PC ecosystem innovation and helped drive hardware mix toward premium devices
  • Phone revenue declined 54% in constant currency reflecting our updated strategy
  • Search advertising revenue excluding traffic acquisition costs grew 29% in constant currency with Bing US market share benefiting from Windows 10 usage
  • Xbox Live monthly active users grew 28% to 39 million

“We’re seeing great traction with businesses who want to bring Microsoft’s cloud, mobile device management technology and data analytics together to improve security and productivity resulting in almost 70 percent year-over-year growth in our commercial cloud run rate,” said Kevin Turner, chief operating officer at Microsoft.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, John Seethoff, deputy general counsel, and Chris Suh, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/investor. The webcast will be available for replay through the close of business on October 22, 2016.

Adjusted Financial Results and non-GAAP Measures

During the first quarter of fiscal year 2016, GAAP revenue, operating income, net income, and earnings per share include the net impact from Windows 10 revenue deferrals. For the first quarter of fiscal year 2015, the financial results included the charges related to the integration and restructuring expenses related to both Microsoft’s restructuring plan announced in July 2014 and the ongoing integration of Nokia Devices and Services (“NDS”). These items are defined below. In addition to these financial results reported in accordance with GAAP, Microsoft has provided certain non-GAAP financial information to aid investors in better understanding the company’s performance. Presenting these measures without the impact of these items gives additional insight into operational performance and helps clarify trends affecting the company’s business. For comparability of reporting, management considers this information in conjunction with GAAP amounts in evaluating business performance. These non-GAAP financial measures should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

 

Non-GAAP Definitions

Microsoft recorded $1.28 billion net deferrals of revenue related to Windows 10 during the three months ended September 30, 2015.

Integration and restructuring expenses were $1.14 billion during the three months ended September 30, 2014, due mainly to restructuring charges of $1.05 billion, including employee severance expenses and the write-down of certain assets in connection with the restructuring plan.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods.  The non-GAAP financial measures presented below should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. All growth comparisons relate to the corresponding period in the last fiscal year.

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About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) is the leading platform and productivity company for the mobile-first, cloud-first world and its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

  • intense competition in all of Microsoft’s markets;
  • increasing focus on services presents execution and competitive risks;
  • significant investments in new products and services that may not be profitable;
  • acquisitions, joint ventures, and strategic alliances may have an adverse effect on our business;
  • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
  • Microsoft’s continued ability to protect and earn revenues from its intellectual property rights;
  • claims that Microsoft has infringed the intellectual property rights of others;
  • the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;
  • cyber-attacks and security vulnerabilities in Microsoft products and services that could reduce revenue or lead to liability;
  • disclosure of personal data that could cause liability and harm to Microsoft’s reputation;
  • outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
  • government litigation and regulation that may limit how Microsoft designs and markets its products;
  • potential liability under trade protection and anti-corruption laws resulting from our international operations;
  • Microsoft’s ability to attract and retain talented employees;
  • adverse results in legal disputes;
  • unanticipated tax liabilities;
  • Microsoft’s hardware and software products may experience quality or supply problems;
  • exposure to increased economic and operational uncertainties from operating a global business;
  • catastrophic events or geo-political conditions may disrupt our business; and
  • adverse economic or market conditions may harm our business.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/investor.

All information in this release is as of October 22, 2015. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Rapid Response Team, Waggener Edstrom Worldwide, (503) 443-7070, rrt@waggeneredstrom.com

For more information, financial analysts and investors only:

Chris Suh, general manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com/. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. PDT conference call with investors and analysts, is available at http://www.microsoft.com/investor.

Empowering people to do great work

On Thursday, Satya Nadella participated in the White House “Champions of Change” event, where President Obama honored individuals who have helped bring about change for working families within their companies, communities or organizations. Nadella introduced the President and spoke about the policy Microsoft recently announced to ensure our suppliers provide 15 days of annual paid time off to their U.S. employees who are doing substantial work for Microsoft.

I have always believed that technology has the potential to help people achieve their dreams and propel businesses and societies forward. I’ve seen this at work firsthand in my own life, in the lives of my family members and in the communities where I’ve lived — from Hyderabad, India, to Chicago, Ill., to Clyde Hill, Wash.

I now have the privilege to lead a team of innovative and passionate people who want to deliver technology that makes a meaningful impact in our world. This is the core of who we are at Microsoft. We aspire to empower every individual and every organization on the planet to achieve more.

We think about the word “empowering” expansively. Empowering everyone means building platforms and products for everyone — small-business owners, researchers, students, professionals, developers, entrepreneurs, people with any ability and people with any income level. It also means investing in the next generation and creating new job opportunities — from inspiring students to pursue careers in computer science to providing IT training for active duty military personnel to enter the civilian workforce.

We have big ambitions, and reaching them starts with empowering the people who work at Microsoft and the people who work on our behalf to bring their “A” game every day. We want people to be healthy and work in an inclusive environment that values diverse perspectives, experiences and backgrounds.

We also realize that a healthy work life extends outside the office walls. Microsoft has long provided industry-leading benefits to employees and their families, including comprehensive health and wellness programs, family care support, paid vacation time, paid sick leave, and paid leave for new parents. Our benefits extend to married couples and partners, whether same-sex or opposite-sex, and are designed to support and respond to the varying needs of our diverse workforce in meaningful ways. Over the past few months, as the national conversation about income inequality and the challenges facing workers and their families has intensified, we began to think more broadly about the people who do work on our behalf.

Like others, Microsoft relies on outside companies that provide us goods and services such as building maintenance, campus security and software localization. As we considered the contributions these individuals make, we concluded that the people who work for our suppliers are critical to our success, and we want them to have the benefit of paid time off.  As a result, last month we announced a policy to ensure that our suppliers provide at least 15 days of annual paid time off to their U.S. employees doing substantial work for Microsoft.

Paid time off is good for business — it’s been shown to lead to increased productivity for workers, improved employee retention and lower healthcare costs.

It’s also good for people and our society — paid time off supports healthier workers and families and stronger family ties. Moreover, lack of paid time off disproportionately impacts low-wage earners and minorities. According to one study, only 49 percent of people in the bottom quarter of earners get paid time off. As an industry and society, we can do more to help everyone reap the benefits of paid time off.

I want Microsoft to be a place where our employees and everyone who works on our behalf can bring their very best every day, and this policy change was the right next step for us. We hope that we can share our learnings and experiences with others and will continue to evolve our company to better serve and delight our customers.

It was a privilege and an honor to participate in the Champions of Change discussion at the White House to share why Microsoft is taking this step — just one in our journey to empower every individual and organization on the planet to achieve more.

Convergence 2015: big data, small patterns, better business — Weekend Reading: March 20 Edition

Where to start this week? With so much going on at Microsoft’s annual Convergence business community summit, held this year in Atlanta, we could almost call this week’s edition: “Convergence CliffsNotes.” Let’s get to it.

Microsoft Chief Executive Officer Satya Nadella kicked off the premiere business event, Monday, with a keynote address highlighting how businesses can use data to help predict trends and better understand their customers, which can lead to greater demand for their products and services as well as increased customer loyalty. “In a world of big data, small patterns matter,” he said.

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Also on Monday at Convergence, Microsoft unveiled Azure IoT Suite, a cloud-based tool for the Internet of Things as well as other tools that “push the edge of what’s now possible,” wrote Judson Althoff, Microsoft North America president, on The Official Microsoft Blog. In addition, Power BI and Office Delve are being rolled out globally, and Microsoft is bringing business collaboration to a whole new level through Skype for Business, with a technical preview unveiled Monday.

Giving our customers a chance to fall in love with products by giving them a free version – not just a trial version. That was one of six strategies for transforming the company’s marketing strategy shared by Chris Capossela, Microsoft executive vice president and chief marketing officer, in a keynote address at Convergence 2015. Other key, foundational themes for Microsoft’s marketing transformation over the past 18 months? Building marketing into products; using modern storytelling; having the world’s best data platform; using ad platforms, not ad campaigns; and having Microsoft’s brand play a bigger role, Capossela said.

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Speaking of great storytelling, Microsoft News Center’s Athima Chansanchai penned a couple of terrific pieces this week outlining real-world examples of how businesses are using Microsoft technology to be better. Big box giant Lowe’s used AccuWeather’s detailed forecasting to get its trucks out ahead of this winter’s challenging conditions and get much-needed home-fortifying supplies to their stores. Lowe’s is one of AccuWeather’s customers using the Microsoft Cloud to drive mission-critical enterprise solutions. Similarly, Los Angeles-based WASH Multifamily Laundry Systems uses Microsoft Dynamics to measure the company’s performance. Dynamics allows parts inventory, active service calls, collections and other daily operations to feed into one system, which everyone from an executive to a service tech can draw from to do their jobs better.

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Actually, there were a couple other items of note this week, beyond all of the excitement in Atlanta. Windows 10 will launch this summer in 190 countries and 111 languages around the world, Terry Myerson, Microsoft executive vice president of the Operating Systems group, announced Wednesday at the Windows Hardware Ecosystem Community (WinHEC) summit in China.

Also this week, Microsoft introduced the Lumia 430 Dual SIM, its most affordable Lumia phone, Thursday, making smartphone ownership a reality for more people around the world. With an estimated retail price of $70, the phone is built with the latest Windows Phone 8.1 software, which will be able to upgrade to Windows 10, and comes pre-loaded with Microsoft Office, Skype and OneDrive.

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In apps news, Madefire, the free comic book reader that transforms digital comics into interactive experiences with 360-degree panoramic views, is now available on Windows Phone. The Xbox Music app now lets you listen to music and playlists you’ve saved in OneDrive on your Windows Phone, PC and tablet. Or, if you’d rather listen to others sing, and battle for the opportunity to be famous doing it, cast your vote for NBC’s The Voice contestants and see results in real time using the The Voice Official App, now available on Windows Phone.

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This week on our global adventure to find people who #DoMore on the Microsoft Instagram page, we met Gisele Agnew, who is transforming lives through yoga and making candles to empower others.

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Here’s hoping this edition of Weekend Reading has inspired you to get out there, and do great things. See you next week.

Posted by Aimee Riordan
Microsoft News Center Staff

 

 

Microsoft cloud and devices momentum highlights second quarter results

Commercial cloud revenue grows triple-digits for the sixth consecutive quarter, reaching an annualized revenue run rate of $5.5 billion.

REDMOND, Wash. — January 26, 2015 — Microsoft Corp. today announced revenue of $26.5 billion for the quarter ended December 31, 2014. Gross margin, operating income, and diluted earnings per share (“EPS”) for the quarter were $16.3 billion, $7.8 billion, and $0.71 per share, respectively.

These financial results include $243 million of integration and restructuring expenses, or a $0.02 per share negative impact, related to both Microsoft’s restructuring plan announced in July 2014 and the ongoing integration of the Nokia Devices and Services (“NDS”) business.  There is also a $0.04 per share negative impact related to income tax expense resulting from an IRS audit adjustment.

Microsoft also announced its intention to complete the existing $40 billion share repurchase authorization by December 31, 2016.

The following table notes the impact of the integration and restructuring expenses on the company’s financial performance (“Noted Items”). This financial information is provided to aid investors in better understanding the company’s performance. All growth comparisons relate to the corresponding period in the last fiscal year.

Earnings FY15 Q2“Microsoft is continuing to transform, executing against our strategic priorities and extending our cloud leadership,” said Satya Nadella, chief executive officer of Microsoft.  “We are taking bold steps forward across our business, and specifically with Windows 10, to deliver new experiences, new categories, and new opportunities to our customers.”

“We remain disciplined in our approach to operational and execution excellence, balanced with investments that drive meaningful growth for the business while increasing capital return to shareholders,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Devices and Consumer revenue grew 8% to $12.9 billion, with the following business highlights:

  • Surface revenue of $1.1 billion, up 24%, driven by Surface Pro 3 and accessories
  • Office 365 Home and Personal subscribers increased to over 9.2 million, up 30% sequentially over prior quarter
  • Search advertising revenue grew 23%, with Bing U.S. market share at 19.7%, up 150 basis points over prior year
  • Xbox console sales totaled 6.6 million units, with strong holiday season performance
  • Phone Hardware revenue of $2.3 billion, with 10.5 million Lumia units sold driven by growth in affordable smartphones
  • Windows OEM Pro revenue declined 13%; revenue was impacted by the business PC market and Pro mix returning to pre-Windows XP end of support levels and by new lower-priced licenses for devices sold to academic customers
  • Windows OEM non-Pro revenue declined 13%, with license growth from opening price point devices

Commercial revenue grew 5% to $13.3 billion, with the following business highlights:

  • Commercial cloud revenue grew 114% driven by Office 365, Azure and Dynamic CRM Online, and is now on an annualized revenue run rate of $5.5 billion
  • Office Commercial products and services revenue declined 1%; transactional revenue was impacted by the continued transition to Office 365 and declines in commercial PCs following the XP refresh cycle
  • Server products and services revenue grew 9%, with double-digit growth of SQL Server and System Center
  • Windows volume licensing revenue increased by 3%, with annuity revenue growth partially offset by declining transactional revenue

“We again saw enthusiasm and demand around our cloud offerings like Office 365, Dynamics CRM Online and Azure, as well as Surface Pro 3,” said Kevin Turner, chief operating officer at Microsoft. “Our sales engagement worldwide continues to focus on helping customers and partners transition to the cloud and navigate the shifting product mix related to our services and solutions.”

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, John Seethoff, deputy general counsel, and Chris Suh, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PST (5:30 p.m. EST) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/investor. The webcast will be available for replay through the close of business on January 26, 2016.

Noted Items Definition

Integration and restructuring expenses were $243 million during the three months ended December 31, 2014.  Integration and restructuring expenses include employee severance expenses and costs associated with the consolidation of facilities and manufacturing operations, including asset write-downs and contract termination costs, resulting from Microsoft’s restructuring plan. Integration and restructuring expenses also include systems consolidation and other business integration expenses, as well as transaction fees and direct acquisition costs, associated with the acquisition of NDS.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services, devices, and solutions that help people and businesses realize their full potential.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

  • intense competition in all of Microsoft’s markets;
  • increasing focus on services presents execution and competitive risks;
  • significant investments in new products and services that may not be profitable;
  • acquisitions, joint ventures, and strategic alliances may have an adverse effect on our business;
  • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
  • Microsoft’s continued ability to protect and earn revenues from its intellectual property rights;
  • claims that Microsoft has infringed the intellectual property rights of others;
  • the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;
  • cyber-attacks and security vulnerabilities in Microsoft products and services that could reduce revenue or lead to liability;
  • disclosure of personal data that could cause liability and harm to Microsoft’s reputation;
  • outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
  • government litigation and regulation that may limit how Microsoft designs and markets its products;
  • potential liability under trade protection and anti-corruption laws resulting from our international operations;
  • Microsoft’s ability to attract and retain talented employees;
  • adverse results in legal disputes;
  • unanticipated tax liabilities;
  • Microsoft’s hardware and software products may experience quality or supply problems;
  • exposure to increased economic and operational uncertainties from operating a global business;
  • catastrophic events or geo-political conditions may disrupt our business; and
  • adverse economic or market conditions may harm our business.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/investor.

All information in this release is as of January 26, 2015. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, financial analysts and investors only:

Chris Suh, general manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com/. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. PST conference call with investors and analysts, is available at http://www.microsoft.com/investor.

Microsoft and Dropbox announce strategic partnership to give people more freedom in how they work

SAN FRANCISCO and REDMOND, Wash. — Nov. 4, 2014 — Dropbox Inc. and Microsoft Corp. on Tuesday announced a strategic partnership to help people work more effectively. The two industry-leading companies are teaming up to integrate their services for collaboration across Dropbox and Microsoft Office on phones, tablets and the Web.

When you select “edit” while you are viewing your document in Dropbox, the appropriate Office app is offered up for editing. Continue editing, and the apps work together to automatically save your changes back to Dropbox.
When you select “edit” while you are viewing your document in Dropbox, the appropriate Office app is offered up for editing. Continue editing, and the apps work together to automatically save your changes back to Dropbox.

With data and mobile usage exploding globally, millions of people are turning to Dropbox and Office to access, manage and collaborate on their files from anywhere, anytime. Over 1.2 billion people use Office to get work done, and Dropbox has become home to more than 35 billion Office files.

“In our mobile-first and cloud-first world, people need easier ways to create, share and collaborate regardless of their device or platform,” said Satya Nadella, CEO of Microsoft. “Together, Microsoft and Dropbox will provide our shared customers with flexible tools that put them at the center for the way they live and work today.”

“People around the world have embraced Office and Dropbox to empower the way they live and work today,” said Drew Houston, CEO and co-founder of Dropbox. “Our partnership with Microsoft will make it easier than ever to collaborate seamlessly across these platforms, giving people the freedom to get more done.”

This partnership will enable people at work, home and school to easily collaborate on documents, spreadsheets and presentations. These capabilities will first be available from within the Dropbox and Office apps on tablets and phones, and will soon be accessible via the Web.

Dropbox and Microsoft users can now do the following:

  • Access Dropbox from Office apps to get to their files and folders faster.
  • Edit Office files directly from Dropbox and sync them across devices.
  • Share new or edited files from the Office apps using simple Dropbox sharing functionality.

The functionality will first be included in the next updates to the Office apps for iOS and Android, coming in the next few weeks. The Web integrations between the Dropbox website and Office Online will be available in the first half of 2015. Dropbox will also make its application available on the Windows Phone and Windows tablet platforms in the coming months.

These capabilities will be available to all Office users with a Dropbox account. Dropbox for Business customers will need an Office 365 subscription. More information can be found by visiting the Dropbox blog at https://blog.dropbox.com/2014/11/dropbox-microsoft-office-partnership and the Office blog at http://blogs.office.com.

About Dropbox

Dropbox’s mission is to build a home for everyone’s most important information and bring it to life. We make it easy for millions of people at home and at work to access, share, and collaborate on their files so they can be more productive. For more information, please visit https://www.dropbox.com/press.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services, devices and solutions that help people and businesses realize their full potential.

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/news/contactpr.mspx.

Microsoft cloud strength and hardware progress drive record first-quarter revenue

Strong performance across commercial and consumer segments delivers revenue of $23.20 billion.

REDMOND, Wash. — October 23, 2014 — Microsoft Corp. today announced revenue of $23.20 billion for the quarter ended September 30, 2014. Gross margin, operating income and diluted earnings per share (“EPS”) for the quarter were $14.93 billion, $5.84 billion and $0.54 per share, respectively.

These financial results include $1.14 billion of integration and restructuring expenses, or an $0.11 per share negative impact, related to both Microsoft’s restructuring plan announced in July 2014 and the ongoing integration of the Nokia Devices and Services (“NDS”) business.

The following table notes the impact of the integration and restructuring expenses on the company’s financial performance (“Noted Items”). This financial information is provided to aid investors in better understanding the company’s performance. All growth comparisons relate to the corresponding period in the last fiscal year.

Earnings 10-23-14“We are innovating faster, engaging more deeply across the industry, and putting our customers at the center of everything we do, all of which positions Microsoft for future growth,”  said Satya Nadella, chief executive officer of Microsoft. “Our teams are delivering on our core focus of reinventing productivity and creating platforms that empower every individual and organization.”

“We delivered a strong start to the year, with continued cloud momentum and meaningful progress across our device businesses,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “We will continue to invest in high-growth opportunities and drive efficiencies across the organization to deliver long-term shareholder value.”

Devices and Consumer revenue grew 47% to $10.96 billion, with the following business highlights:

  • Office 365 Home and Personal subscribers totaled more than 7 million, representing more than 25% sequential growth over the previous quarter.
  • Surface Pro 3 momentum drove Surface revenue of $908 million.
  • New Windows consumer licensing programs drove positive unit growth while OEM non-Pro revenue declined 1%.
  • Total Xbox console sales were 2.4 million, growing 102%, and Xbox One launched in 28 new markets.
  • Phone hardware revenue exceeded $2.6 billion with ongoing focus on execution discipline.

Commercial revenue grew 10% to $12.28 billion, with the following business highlights:

  • Server products and services revenue increased 13%, with double-digit growth for SQL Server, System Center and Windows Server.
  • Office Commercial products and services revenue grew 5% as customers transition to Office 365.
  • Commercial cloud revenue grew 128% driven by Office 365, Azure and Dynamics CRM.
  • Lync, SharePoint and Exchange, our productivity server offerings, collectively grew double-digits.
  • Windows volume licensing revenue increased 10%.

“Customers are embracing our latest technologies from Surface Pro 3 and Office 365 to Azure and SQL Server,” said Kevin Turner, chief operating officer of Microsoft. “Through great execution by our sales teams and our partners, we have been able to deliver our truly differentiated value to the marketplace.”

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, John Seethoff, deputy general counsel, and Chris Suh, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/investor. The webcast will be available for replay through the close of business on October 23, 2015.

Noted Items Definition

Integration and restructuring expenses include employee severance expenses and costs associated with the consolidation of facilities and manufacturing operations, including asset write-downs and contract termination costs, resulting from Microsoft’s  restructuring plan. Integration and restructuring expenses also include systems consolidation and other business integration expenses, as well as transaction fees and direct acquisition costs, associated with the acquisition of NDS.

Integration and restructuring expenses were $1.14 billion during the three months ended September 30, 2014, due mainly to restructuring charges of $1.05 billion, including employee severance expenses and the write-down of certain assets in connection with the restructuring plan.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services, devices and solutions that help people and businesses realize their full potential.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

  • intense competition in all of Microsoft’s markets;
  • increasing focus on services presents execution and competitive risks;
  • significant investments in new products and services that may not be profitable;
  • acquisitions, joint ventures, and strategic alliances may have an adverse effect on our business;
  • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
  • Microsoft’s continued ability to earn expected revenues from its intellectual property rights;
  • claims that Microsoft has infringed the intellectual property rights of others;
  • the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;
  • cyber-attacks and security vulnerabilities in Microsoft products that could reduce revenue or lead to liability;
  • disclosure of personal data that could cause liability and harm to Microsoft’s reputation;
  • outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
  • government litigation and regulation that may limit how Microsoft designs and markets its products;
  • potential liability under anti-corruption and trade protection laws resulting from our international operations;
  • Microsoft’s ability to attract and retain talented employees;
  • adverse results in legal disputes;
  • unanticipated tax liabilities;
  • our hardware and software products may experience quality or supply problems;
  • exposure to increased economic and operational uncertainties from operating a global business;
  • catastrophic events or geo-political conditions may disrupt our business; and
  • adverse economic or market conditions may harm our business.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/investor.

All information in this release is as of October 23, 2014. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, financial analysts and investors only:

Chris Suh, general manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com/. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. PDT conference call with investors and analysts, is available at http://www.microsoft.com/investor.

Microsoft delivers the industry’s complete cloud

SAN FRANCISCO — Oct. 20, 2014 — Monday, at an event in San Francisco, Microsoft Corp. CEO Satya Nadella outlined how Microsoft is using Microsoft Azure, Office 365 and Microsoft Dynamics to deliver the industry’s most complete cloud — for every business, every industry and every geography. Furthering this commitment, Microsoft announced several enhancements to its hyper-scale, enterprise-grade, hybrid cloud platform, including the new Azure G-series of virtual machines and Premium Storage; the general availability of the Microsoft Cloud Platform System, powered by Dell; partnerships with Cloudera Inc. and CoreOS; and a new Azure Marketplace.

“The enterprises of today and tomorrow demand a cloud platform that is reliable, scalable and flexible,” Nadella said. “With more than 80 percent of the Fortune 500 on the Microsoft cloud, we are delivering the industry’s most complete cloud — for every business, every industry and every geography.”

A hyper-scale, enterprise-grade and hybrid cloud infrastructure

Worldwide demand for cloud computing continues to accelerate, and Microsoft is investing to meet this demand. Monday the company announced the latest milestone in the global expansion of Azure, with general availability of Azure in the Australia region next week. By the end of 2014, Microsoft Azure will be operational in 19 regions around the world — at least double the number of any other public cloud provider.

Microsoft also announced the G-series of virtual machines and premium storage for Microsoft Azure. Powered by the latest Intel Xeon processors, the G-series will be the largest virtual machines available in the public cloud to date, while Azure Premium Storage will provide incredible performance per virtual machine. Together they will deliver the enterprise-grade scale and performance that enterprises and developers need to run the most demanding workloads in the cloud.

As enterprises accelerate their adoption of cloud computing, the demand for security enhanced, scalable and reliable hybrid cloud solutions is on the rise. The Microsoft Cloud Platform System (CPS), powered by Dell, brings together Azure, Windows Server and Microsoft System Center to deliver an “Azure-consistent cloud in a box.” With pre-integrated hardware from Dell and software from Microsoft, CPS delivers learnings from Azure to customers and partners with the control of an on-premises appliance. CPS will be available for purchase on Nov. 3.

Enterprise + startups and ISVs = accelerated cloud adoption and innovation

With more than 40 percent of Azure revenue coming from startups and ISVs, the new Azure Marketplace will connect this important ecosystem with enterprise customers everywhere. Now Azure customers will be able to search for and deploy their favorite operating system, service or application with just a couple of clicks. Monday, two new partners join Docker Inc., Oracle and hundreds of others in the Azure Marketplace:

  •  Cloudera, a leader in enterprise analytics and data management, will be Azure certified by the end of 2014. This will provide a quick and easy way to deploy Cloudera Enterprise, connect to Microsoft Power BI and discover new insights, in minutes.
  • CoreOS, the popular container-based Linux operating system, is now available to all Azure customers. Customers can deploy CoreOS images directly from the Azure Marketplace starting Monday. This broadens Microsoft’s first-class support for Linux on Azure.

“Our ecosystem is the backbone of our cloud platform, and our embrace of open source technologies is at the heart,” said Scott Guthrie, executive vice president of Cloud and Enterprise at Microsoft. “By helping to create an open platform powered by choice and flexibility, we are enabling the enterprises and developers of today and tomorrow to connect with each other and create new business opportunities in the mobile-first, cloud-first world.”

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services, devices and solutions that help people and businesses realize their full potential.

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/news/contactpr.mspx.

 

Steve Ballmer steps down as board member at Microsoft

Dear Satya,

As I approach the six month mark of my retirement and your appointment as CEO, I have been reflecting on my life, my ongoing ownership of Microsoft stock, and my involvement with the company. I have reached some conclusions and wanted to share them with you. I know August is the key month during which the company starts to prepare the proxy statement for the next shareholders’ meeting, and so these thoughts are probably timely for that too.

First, Microsoft has been my life’s work and I am proud of that and excited by what I see in front of the company and this leadership team. There are challenges ahead but the opportunities are even larger. No company in the world has the mix of software skills, cloud skills, and hardware skills we have assembled. We draw talent as well as any company in the world. We have the profitability to invest in long-term opportunities and still deliver superior shorter term performance. You’re off to a bold and exciting start.

Microsoft will need to be bold and make big bets to succeed in this new environment. Writing great software is a tremendous accomplishment and selling software has been a fabulous business. In the mobile-first, cloud-first world, software development is a key skill, but success requires moving to monetization through enterprise subscriptions, hardware gross margins, and advertising revenues. Making that change while also managing the existing software business well requires a boldness and fearlessness that I believe the management team has. Our board must also support and encourage that fearlessness for shareholders to get the best performance from Microsoft. You must drive that.

I had not spent any time really contemplating my post-Microsoft life until my last day with the company. In the six months since leaving, I have become very busy. I see a combination of the Clippers, civic contribution, teaching and study taking a lot of time. I have confidence in our approach of mobile-first, cloud-first, and in our primary innovation emphasis on platforms and productivity and the building of capability in devices and services as core business drivers. I hold more Microsoft shares than anyone other than index funds and love the mix of profits, investments and dividends returned in our stock. I expect to continue holding that position for the foreseeable future.

Given my confidence and the multitude of new commitments I am taking on now, I think it would be impractical for me to continue to serve on the board, and it is best for me to move off. The fall will be hectic between teaching a new class and the start of the NBA season so my departure from the board is effective immediately.

I bleed Microsoft — have for 34 years and I always will. I continue to love discussing the company’s future. I love trying new products and sending feedback. I love reading about what is going on at the company. Count on me to keep ideas and inputs flowing. The company will move to higher heights. I will be proud, and I will benefit through my share ownership. I promise to support and encourage boldness by management in my role as a shareholder in any way I can.

All the best,

Steve

Satya

Nadella
response to Steve Ballmer

Steve,

First, thank you for all of your support during my transition this year and for the past 34 years. It’s been a great privilege to have worked with you and learned from you. Under your leadership, we created an incredible foundation that we continue to build on — and Microsoft will thrive in the mobile-first, cloud-first world.

While your insights and leadership will be greatly missed as part of the board, I understand and support your decision.

As you embark on your new journey, I am sure that you will bring the same boldness, passion and impact to your new endeavors that you brought to Microsoft, and we wish you incredible success. I also look forward to partnering with you as a shareholder.

On behalf of all of Microsoft and the Board of Directors, thank you.

Satya